Arielle Zuckerberg, Winning Founder Recipe: The Rizz & Tiz

0:00You've become famous for this winning founder theory called the Riz and the tiz. We believe that neurodivergence is a superpower. We want it to feel like the home for the magically weird. VC Twitter is like one of the worst places on the internet. Yeah, I agree with that. What are some of your most exciting or companies that we should be looking out for right now? One of our founders doesn't believe in smartphones. He carries a disposable camera and a flip phone. You're building an adult frat and sorority. So is this like how you're cultivating community? Like, what does this mean? Arielle Zuckerberg, welcome to the show.

0:43Thank you so much for having me. It's great to be here. So I hear you're in Montana. Are you skiing? Yes, I'm in Montana. I am with family and one of our founders, and I've been skiing a little bit before work every day. That's fantastic. So the ski lore is real for VCs, huh? Yeah, I know. I hate to be a cliche, but I've been skiing since I was three years old and it's one of my passions and my biggest hobby, basically. Well, that's fantastic. An obsession, really. Good. I think I actually promote hobbies. I think people should be doing sports and being outside. So don't feel bad about it. Embrace it.

1:25That's great. I am actually a woman of maybe too many hobbies. So I probably need to cut back. I hear you're also a DJ. So that's another hobby. What else do we have? Oh, man. I have recently picked up surfing. Okay. Which I love. Let's see, I have gotten really into romanticcy, reading romanticcy. Yeah, during maternity leave in 2024. That was my main source of entertainment while I was nursing. So I've kind of kept that going. So we have a lot of fun topics to cover today, including lessons from your mentor, John Doerr, the race to$100 million ARR as the new key milestone for early stage companies, how long journey prices early stage rounds, and what metrics and signals you're looking for for follow on financing.

2:18But to start, you've become famous for this winning founder theory called the Riz and the Tiz. Could you just unpack this for us? Yes, of course. So this is kind of how we think about evaluating founders at Long Journey. Literally in our investment committee meetings, we talk about whether or not this founder has the right balance of Riz and Tiz. And what that means is charisma, of course, which is can this person recruit an amazing team? Can they attract downstream funding? Are they going to be a magnetic leader? We believe that neurodivergence is a superpower. And we look for people that live their lives differently.

3:04And I think it also represents an intensity and directness. So we want the balance of both. And we think it kind of takes both to be an amazing founder. Do you have any examples of the Riz and the Tiz? One of our founders doesn't believe in smartphones. He carries a disposable camera and a flip phone. Wow. Yeah. And we have another founder who is obsessed with delegating and also uses special focus glasses sometimes when he works that has like these slits in them. So you can only see your computer. So these are kind of some of the examples of people who are living their lives differently. But those people are also incredibly magnetic.

3:46And, you know, they have the riz, too. Well, to your point and to the ethos of long journey ventures, you do invest into the magically weird. And sometimes we don't exactly know what that looks like or feels like, but it seems like that's kind of spot on with the type of founder you guys look for. Definitely. I mean, I think these things are like a proxy for the examples I gave are like a proxy for people who live their lives differently and are, you know, have the boldness to go after a really magically weird idea. Speaking of the team. So Lee says that Cyan might be the soul of Long Journey, but you're the vibe.

4:31So what does that mean? How are you the vibe? I think tactically what it means to be the vibe is I am the chief swag officer and I'm also making playlists for all of our events. But I take these things very seriously and I spend perhaps too much time on them. But for example, our most recent swag item, I kind of think about it differently. A lot of people have like, you know, the classy logo and on like a Patagonia vest or something. I like to think about it more as merch than swag. So I find inspiration from like rock concerts, festivals, sports teams, like merch that you would purchase. So our previous piece of swag was like this unicorn that was on fire with a guitar.

5:22And yeah, it was like skulls and shit. It looks like a rock band shirt. Merch is super important. I highly support that. So I think that's awesome. Yeah. I mean, we've had other VCs wear our swag at events. Okay, that's a positive indicator. So that's a good indicator. That's a good signal right there. Absolutely. So I know that you've had more of a traditional background and now you're at more of, I would say, like an artsy kind of intuitive fund rather than a rigorous metrics driven fund. I think you've also been described as the trad VC on the team. You guys are just hilarious. I love you guys.

6:08So could you just explain more about the lessons you've learned in your arc from coming from more of the traditional venture capital finance world? I know that you've also been mentored by John or at Kleiner. So could you just walk us through that arc? Yeah. So Hunter Walk, I think famously said in the email when I announced that I was joining Long Journey, he was like, oh, you went from being the weirdest person at KOTU to being the least weird person at Long Journey. I think that's pretty spot on. But basically, so before I even joined VC, I was a recovering product manager. So I really, when I first joined Kleiner, it was a big 180 in my career.

6:52So I was just trying to scoop up and be a sponge for as much knowledge as I could. And I remember like my first week at Kleiner working on a deal with John Doerr and we were doing diligence on a company and he was in this diligence document at three in the morning. and I was like, this is insane. And I was just so blown away by his work ethic, especially for, you know, he was later stage in his career and had an insane track record. And I was just blown away by how hard he still hustled. So I really felt that I like learned to do diligence the John doorway. And what that means is like turning every stone and just running something to the ground, asking all the questions you can, setting up your questions beforehand and systematically answering all of them, no matter how far you need to go.

7:48What kind of principles other than diligence have you learned from him? What would you say seriously carries on into how you view companies or view new trends in the venture capital world? Yeah, I think one of the most important things I learned from him is that it's all about the people. I think even, you know, when I was angel investing before joining Kleiner Perkins, I was really enamored by ideas and I was very thesis driven. And, you know, I had this view of where I thought the, where the world was going. And John Doerr taught me, like, look to the founders to tell you where the future is going and really focus on the people.

8:31And another lesson I learned is, like, you know, some company, some VC firms rather, you know, take a more active stance in swapping out CEOs if the company is not performing well. But something I learned is, like, that's usually, it usually doesn't work out. So, you know, you're really in with this founder for the long haul, which is why it's so important that you're backing the right people. Knowing that and how long it's been since you've been there and been in the industry, there's been so many different tide changes. It's actually exhausting at this point. But I'm just really curious from your perspective in this new intuitive role, learning everything that you've learned, what do you think is absolute trash advice that we as VCs keep on either getting or giving?

9:27Okay. I think that VC Twitter is like one of the worst places on the internet. So I think, you know, a lot of people are like, oh, I want to like raise my profile. And I think I'm going to like just tweet a bunch and build my audience on Twitter. And I mean, I personally think that that's a little overrated. And I try to think about like, where are the founders? Yeah, I agree with that. I totally agree with that. It really doesn't carry too much into the real world. So where are you looking for these founders if they're not on this magical world called Twitter and X? We are really focused on, this is at Long Journey, this is the year of deal flow.

10:12Kind of like the Chinese Zodiac, like the year of the dragon, the year of the snake. This is the year of the deal flow at Long Journey. So we've been thinking a lot about this. And we are partnering with this amazing organization called Edge Institute, which runs these like month long events. Like one is called Edge Esmeralda, where young builders gather and talk about the future. So we are just trying to be where the young builders are. So by partnering with things like Edge Institute, working with scouts, working with angels that we really respect and also have that weird lens that we love. So these are just some of the things that we're pursuing.

10:56So where do you exactly see or anticipate seeing where Long Journey is going to be in the next five to 10 years? We love early stage and will always be focused on early stage, pre-seed and seed. But we are building our double down muscle. This is something that we've taken concerted effort. I mean, Lee and Sian hired me to help with this. And, you know, it's something we want to continue to exercise and build over time. We recently did the largest SPV we've ever done. So this is, I think, where we're growing as a firm in the next, call it five to 10 years. From your time at Kleiner and Co2, what stage were you working on and what kind of deals were you looking at?

11:45Kleiner is mostly Series A and at Co2, it was Series A and Series B with some seed. Right. And so you're brought in, you're helping out with a lot of the follow-on capital for journey, long journey. So what exactly is your framework there? How do you decide to then double down, like you just said, on these companies, given your experience in, let's say, like, slightly later stage? Yeah, we actually have a pretty specific framework that I'm happy to walk you through. So one is, does the company have product market fit? And this actually, for some of our deeper tech companies, we do something more like milestone base.

12:25But generally, you know, for most of our companies, it's do they have product market fit? Do we see a path to a 10x from here from the time of doubling down? does it still feel proprietary like is there still something weird about it or do we have some unique perspective or angle on like why like why are we the ones who are doubling down and where other people might see the company differently like what information do we have that others don't are there any specific metrics that are associated with that I know you said like hundred acts that one the the proprietary like that one i think is more vibes based i will say like what do we know that others don't know because we've had a longer standing relationship with the company and like what are others missing that we aren't missing or vice versa so that's that's what i mean by like how proprietary is this um then how de-risked is it like how basically how much progress has the company made and in what areas have been de-risked especially since our round of our previous round.

13:33Is this a public company founder? Like, can we see this founder being, you know, ringing the bell? Is this one of our breakout companies or is it, would we consider this a flagship deal or generational company that's also kind of more vibes based? And then how do we think about downstream investor demand? Because, you know, Compared to some other funds out there, we're a smaller fund. So we're not going to be able to capitalize the company throughout their entire journey. So what do we think the demand from our downstream peers will be? How far into follow-on capital do you go? Like, are you going into the Bs, the Cs, the Ds?

14:15Is it mostly in the As? Yeah. So our goal, and this is kind of goes back to the five to 10 years, where do you see long journey? Our stated goal for this fund is that we don't want to be afraid to put up to$25 million into our best companies. And that's over time. So, you know, our initial check, we're leading pre-seed and seed rounds. Let's call it with like a one to two and a half million dollar check. So that kind of gives you an idea of, you know, how much capital we want to deploy into our top, top companies over time. How do you think about pricing between those rounds? Like, are you super price sensitive?

14:55Is that a factor that comes into follow on? Yeah, we are super price sensitive, I would say. And our average entry valuation on the pre-seen seed side is about 15, which I think is quite a bit lower than a lot of other folks out there and something we're very proud of. I think that also reflects the kind of crazy stuff that we love. Um, but when I joined long journey, I wasn't as familiar with fun models. I, you know, that wasn't a big focus area of mine at KOTU or Kleiner. Um, but Lee immediately got me deep in the weeds of what the main levers are with our fun model and entry valuation is so, so important.

15:42And I learned this pretty early on, like, you know, basically week one at long journey, He showed me like entering at$25 million versus$15 million, the exit value of the company and how that impacts the fund model is very significant. So this is it's something that we are always keeping in mind. Do you think that's something founders should understand more, too? I find there's kind of an often like a disconnect because VCs are always seen as like hungry capitalists and are evil. But there is an actual structure behind this and it's also to protect them in the long term as well. So how do you think about that?

16:26Yeah, we try to explain this to founders when we're kind of like negotiating terms. But yeah, definitely wasn't as much of a concern at Kotu. for example, entry valuation. We kind of thought about the model differently at KOTU, and that just wasn't kind of the lever that we were focused on. Yeah. Well, we're seeing those 2021 pricings kind of come full circle. It seems like we might not learn from the past as much as we want to say we are. But these rapid AI, super high growth companies are starting to hit that again. I don't know if you saw, but someone just leaked that cursor who's almost at like 100 million ARR in what, like 24 months, something crazy like that.

17:20They're pricing their next round around like$10 billion. Don't quote me on that because we don't know if it's confirmed or anything. Could be just like Twitter fluff. But how do you feel about that kind of, how do you feel about that kind of narrative coming back into the market? Well, what I'm seeing is it's made it very difficult for non-AI companies to get funding, I think. Like a lot of folks are kind of expecting, like when there are companies out there going from zero to 100 in 24 months, it kind of like resets the bar. And if you are a company that's growing really nicely when previously you could get an amazing series A done.

18:06I think you're now being compared to these companies that are just blowing up because they're in AI or just because the demand is explosive for some other reason. But yeah, I think it's made it really difficult for companies who aren't growing in that way to get the attention that they deserve. So the market is taking a really hard pivot into these extremely efficient and fast growth AI companies. Are you seeing anything like this at the early stages? Like what is the sentiment from your eyes as an early stage investor? Are you more keen to find companies? Is this the new standard? I am definitely not expecting every company to follow this trajectory.

18:52I think and I do question like, I think a lot of people are really curious and want to try these tools. And I am not 100 percent sure that a lot of this revenue is going to stick around. I think I'd be very curious to see. And I think every enterprise out there is thinking about what is my AI strategy? And they're looking, they're probably trying 30 ,000 tools under the sun or whatever, and seeing what is actually leading to ROI. And I think, you know, maybe they'll end up with a couple tools, maybe they won't. But I think everything's trying everything right now. So I think we're probably going to see a big drop off.

19:40Yeah, I feel like with all of this next wave, it's hard to discern how much of that revenue is quality or not. But if you're seeing very large numbers, of course, it's a nice shiny object. But who knows? Maybe there's a lot of churn that comes with it. But maybe it doesn't even matter in the end because they are growing that fast and they will put their stake in the ground as the brand. And it's just like something I think about, like, maybe is there something we're getting wrong here? Maybe that is right. Maybe we should be investing into all of the high-flying AI companies because they are going to be market leaders.

20:20I mean, yeah, it's possible. I actually, I saw an Instagram reel the other day where it was kind of like the millennial and the Gen Zer talking about what tools they use. And the millennial was like, Google. And the Gen Z was like, ChatGPT. And then it was like, this, Perplexity, this, Pika. It was like talking about these AI tools being like the new version of like the SaaS companies of yesteryear. So maybe like they will just these newer tools will take over. I think the narrative previously was like, oh, like the incumbents have all the customers already. They'll just like add AI into their own tools.

21:03But yeah, I think what we could be getting wrong is like maybe you kind of have to rethink the entire tool from the ground up to be AI native. And maybe that matters versus like layering it into your existing product. Do you expect most of new companies that are coming out to be AI native? Like, I'm just, I'm thinking how much of what you're seeing in your deal flow is AI native? And do you want it to be? Yeah, we are seeing quite a few AI native. I would say like, you know, the word that people are using is like agentic, which I know for some reason. I don't like it either.

21:48But, yeah, I think so we've invested in a couple like vertical software plays that are AI native. And, but I think it's like mostly about when we made those investments, it's mostly because like the founder has like differentiated insight into like go to market. So it's not a really, it's the AI is like the cherry on top. Um, but I do think, look, like the chat interface, you know, I think back in like 2017, when this was for like chat bots were first becoming a thing, um, just the experience wasn't that good. But now I think people it's, I mean, it's just blown up and I think you can do so much with like the chat interface.

22:35So that's like one way that we're seeing these like AI native apps, like getting tasks done through chat interface. I want to break down a couple companies within the portfolio. What are some of your most exciting or companies that we should be looking out for right now? Yeah, so some of the companies I'm most excited about right now, one of them is a company called Autopallet, which is a robotics company. and they are doing case picking for distribution centers and they are using swarm robotics. So instead of like one or two,$3 million robots, they are using kind of like a fleet of, or swarm rather, of smaller, cheaper robots that, you know, are networked together through software.

23:24Another one that has been a high flyer in our portfolio is superpower, which is like a concierge longevity platform amazing sweatshirts i got a sweatshirt incredible oh my gosh it's all about the merch the merch is so important it's key it's key it really is um but i learned so much from superpower um i actually learned that one of my biomarkers lipoprotein a um is something i need to look out for it's a marker for kind of like a genetic heart disease so it's actually led me to like really look into that and work on that. So I am a huge fan of superpower. I really love in our portfolio, we have a company called Bedrock, which is geothermal for commercial real estate.

24:14And I am obsessed with the founder and I love it. I know that long journey is more creative and how you find companies, how you work with founders. So what's the most wild adventure you've gone on to find one of these? Okay. I think one of the wildest adventures I went on in my investing journey is I operated an excavator. It was freaking awesome. I like it was one of the most fun. Was this diligence? Yes, for diligence. Was it like a marketplace for construction vehicles? It was software for allowing people to remotely operate construction equipment. And the company, the company is awesome. And yeah, I got to first try on a VR headset and operate a real vehicle via VR.

25:19And then in order to compare their software to the real thing, they then let me into an actual excavator. And I had the freaking time of my life. I was like, this is awesome. So I think Cyan mentioned that you guys have a house. Like the house is your office. Yes. you have like seashells and rocks that you pulled from like an adventure at the beach with your founders it's like there's a lot of things going on there yeah we wanted to feel like a home like the home for the magically weird that's like kind of what we're what we're trying to build it's more than a vc fund and it you know it's more than a community it's like when when you walk into our space we really wanted to feel like you're coming into our home and we want you to feel comfortable Do you think that's important?

26:10Like how much of the VC market has gone stale? Like, and having a personality and authenticity? Like, I mean, I'm leading the question already. But like, I might as well be answering it. What's your opinion on this? I don't know. It's so stale. So yeah, but do you really, I mean, you, you've come from traditional VC. Do you think it matters? Like how much of it is nice to have versus like an actual draw? I mean, it has to be true to yourself, right? Like I think, you know, KOTU has an excellent brand and their brand kind of is like excellence and prestige. And I think if they tried to do the same thing, it wouldn't feel authentic.

26:53But like, this is who we are, a long journey. So that, you know, it, it has to be what's like right for you. I think if you, you know, are trying to kind of convey, yeah, it depends on what you're trying to convey and like what your values are. You know, our number one values chase the magically weird. I mean, not everyone is trying to chase the magically weird. So, you know, they're not going to have like seashells that you've collected on the beach in their office. But I think some people, even if it's not doesn't feel weird or out there, are still doing it really well. And like I have great brands, even if that brand is like more buttoned up.

27:38That makes. Yeah, that makes perfect sense. I think it has to be it has to be authentic, like you said. And it has to be like aligned. And I think it really stems from who the like leadership at the firm is. It's a reflection of us as people. So I think like a lot of firms are really big now. And it's really hard to lean into that authenticity when you have more and more people. Because it becomes like a watered down version of, you know, what everyone is standing for. Yeah, it becomes more institutionalized. and you start to miss the actual early hustle, lean team dynamics. Yeah, you lose your soul a little bit for the sake of growth.

28:25It becomes a soulless place. How do you think the ingredients for what a successful VC is have changed? Yeah, I mean, this is, like I said earlier, the Chinese Zodiac, this is the year of the deal flow. So we've been obsessed with like who has interesting proprietary deal flow. And I think if you are able to build a unique network of builders and be like an authentic, create an authentic gathering place for those builders, I think that's like one of the most important things. And that's what we are super focused on. So I think that along with, you know, having your own point of view, like being an individual and not just kind of following what everyone else is doing and actually like the ability and desire to stick your neck out there and do something different and having that unique, different deal flow, I think are like the two key things.

29:30otherwise it's like you're just going to do the same consensus shit that everyone else is doing and you're going to do it later because you don't have access to that deal flow so um getting early and getting different do you think skills have changed like what do you think like skill wise vcs should be focused on or what you would want to hire for in like different associates yeah so i think like having that unique different deal flow is sort of table stakes um And then it's either, and it doesn't have to be both, but I think probably both is even better. You either have to start out with amazing judgment or just a willingness to learn and ability to be really open to feedback and coachable and being able to shift your judgment, which is not an easy thing to do.

30:22But I think that is kind of the key for an associate. Do you think the apprenticeship model is important? Is that something that, I mean, coming from your experience with John Doerr, like, that's a pretty good apprentice right there. Like, so do you think that's still important? I think it's super helpful and valuable. I mean, it's definitely, and I think it's what attracts great associates also. Like they want to learn from amazing partners. And yeah, I think it's like a win-win for both. the partners want access to younger founders and builders and operators and like youthful energy frankly you know someone who's gonna like I mean when I was at Kleiner I was going to like seven events a week or something and you know flying all over the place to random conferences and I mean John Doerr had like an insane amount of energy but he you know he wasn't I mean he Actually, he was flying a lot of places, but not everyone is.

31:30So, yeah, I think it's advantageous to both the partners and the associates. Yeah. He has a lot of energy. I recently met him over the fall at a conference, and I was just surprised he was still going to conferences. Totally. It was really impressive. Yeah. He doesn't need to do that at all. He's a maniac in the best way. Yeah. I think the same with Howard Morgan. Like, I see him out all the time. They love it. It's their life, you know? I also worked closely with Eric Fang, who's now an entrepreneur when I was at Kleiner. And he also, he was incredible and had a ton, a ton of energy. Yeah, it's like a funny balance of going to lots of events, networking, but then also like staying put and being focused and grinding.